Types of Business Insurance
- Professional Liability Insurance
- Property Insurance
- Workers Compensation Insurance
- Product Liability Insurance
For every type of business an individual may own, there is a type of business insurance they should have in place. Any time they’re dealing with people and money, they’re at risk of financial loss. As a business owner, they’re at an even higher risk of loss. Business insurance is a way to protect everything they’ve worked to obtain from loss, which can come in the way of natural disasters, theft, lawsuits and more. In some cases, business insurance may be a good idea, but in other cases, it may be the law requiring it. Here are 5 types of business insurance.
Professional Liability Insurance
Also referred to as errors and omissions (E&O) insurance, professional liability insurance is aimed at businesses that provide services to the public. Professional liability insurance protects a business against lawsuits claiming negligence because of a defective product. If the company makes and/or sells a product that causes bodily harm or injury due to errors or its failure to perform, they’re open to a lawsuit. Professional liability insurance protects the company from financial loss. The business can customize the policy so it meets the needs of that particular business.
Regardless of what type of business an individual or company owns, they either own or lease the property and must have property insurance. Property insurance is always required with a business but is particularly important for a business that has a substantial amount of property and physical assets. It provides insurance coverage against various perils, including windstorms, fire, smoke, vandalism, civil disobedience and theft. While certain events like earthquakes or floods may not be covered under a standard property insurance policy, business owners can get separate policies or riders to cover these disasters. Property insurance covers inventory, furniture, signage and equipment used in the operation of the business.
Workers Compensation Insurance
Workers compensation insurance is a requirement for businesses as soon as they hire even one employee. Even if an employee is performing low-risk and routine duties, they should still be covered in the company’s workers compensation insurance policy. It covers medical bills, disability claims and death benefits if the employee is hurt or killed as part of his work for that company. Even something minor like carpal tunnel syndrome can result in high medical bills and disability claims, and workers compensation insurance will cover those losses. Workers compensation insurance is more than just a good idea; it’s often required by law.
Product Liability Insurance
Product liability insurance is necessary business insurance for any company that manufactures, retails and sells products on the general market. Even if a business takes every step possible to ensure their products are safe, they can still find the business being sued if one of their products cause damage or illness. This policy does not provide protection for the equipment or the building but offers protection against lawsuits stating that their product caused damage to a customer. Coverage can be customized for a specific product depending on the business.
Home-Based Business Insurance
Home-based business insurance is aimed at people who operate their business out of their homes. Many small business owners mistakenly believe that their business is covered under their homeowner’s policy strictly because the business is in their home. This is incorrect. If someone operates the business out of their home, they’re open to lawsuits from clients or damage from certain events or circumstances. If it’s a small business, the business owner may be able to purchase a rider on their homeowner’s insurance policy, but it’ll generally only be for a small business. In most cases, it’s better to have a separate home-based business insurance policy in place.
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Having the right type of business insurance is just as important as actually having the insurance. The U.S. Small Business Administration advises that business owners do their homework prior to purchasing business insurance. Business owners should assess their risks, find reputable insurance agents, comparison shop and re-assess their business needs annually. The most important thing is to have business insurance.